IDEAS home Printed from https://ideas.repec.org/p/fip/fedbwp/101889.html
   My bibliography  Save this paper

The Credit Card Spending Channel of Monetary Policy: Micro Evidence from Account-level Data

Author

Listed:
  • Falk Bräuning
  • Joanna Stavins

Abstract

Monetary policy impacts consumer spending via the effect of interest rate changes on credit card borrowing. Using supervisory account-level spending and balance data, we estimate that a 1 percentage point increase in the interest rate reduces credit card spending by nearly 9 percent and revolving balances by close to 4 percent. Aggregate results are primarily driven by revolving accounts, while we estimate small and statistically insignificant interest-rate elasticity for transaction accounts. Consistent with financial constraints, low-credit-score accounts tend to adjust spending, while high-credit-score accounts adjust balances.

Suggested Citation

  • Falk Bräuning & Joanna Stavins, 2025. "The Credit Card Spending Channel of Monetary Policy: Micro Evidence from Account-level Data," Working Papers 25-10, Federal Reserve Bank of Boston.
    • Handle: RePEc:fip:fedbwp:101889
    DOI: 10.29412/res.wp.2025.10
    as

    Download full text from publisher

    File URL: https://www.bostonfed.org/publications/research-department-working-paper/2025/credit-card-spending-channel-of-monetary-policy.aspx
    File Function: Summary
    Download Restriction: no
    File URL: https://www.bostonfed.org/-/media/Documents/Workingpapers/PDF/2025/WP2510.pdf
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.29412/res.wp.2025.10?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedbwp:101889. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Spozio (email available below). General contact details of provider: https://edirc.repec.org/data/frbbous.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.